FCA given power to instantly ban products

The new Financial Conduct Authority (FCA) will have the power to instantly ban unsuitable financial products without consultation. In a guidance document published yesterday, it was also revealed that the new authority, which will be replacing the Financial Services Authority (FSA) early next year, will be able to impose tougher penalties for financial misconduct, pursue criminal prosecutions and make supervisory judgements about a firm's business model and forward-looking strategy. "The FCA offers a huge opportunity for the regulator and firms to start afresh, and work in partnership to reset how we deal with conduct in financial services," said FSA managing director, Martin Wheatley. The guidance was welcomed by the Council of Mortgage Lenders, the Building Societies Association, the Investment Management Association and the Association of British Insurers. Consumer Focus warned, however, that "the test of the FCA will be whether it prevents toxic products such as PPI, mortgage endowments or split capital trusts in the future. Will it intervene early or will pressure from industry delay action? A model where customers are ripped off, and then awarded compensation years afterwards, is expensive and wasteful and serves consumers badly."

Dramatic rise in mutual lending

Gross mortgage lending by building societies amounted to £3 billion during August, latest statistics from the Building Societies Association (BSA) have revealed. Total lending from mutuals rose by 40% compared with August 2011, whilst savings balances held with building societies increased by £1,158 million, suggesting a growing number of savers prefer to place their finances with mutuals rather than banks. Building societies took a 23% market share in August, 16% higher than in August 2011. Adrian Coles, director-general of the BSA, said: "Lending by mutuals grew substantially in August compared to the same month last year which continues the trend of increased levels of lending activity by mutuals over the year so far. Lending by banks however fell by 13% in August, which follows a 9% reduction in July. Savings balances at mutuals were up significantly compared to August last year. With consumer price inflation on a downwards trend, the pressure on household finances eased somewhat allowing more money to be saved. The changes in deposits may also reflect consumers switching their accounts over to mutuals over the past two months as people opt for better service and a more ethical way of banking."

Hooray, people are finally realising that mutuals are a good idea.

Call for payday loan regulation

The chair of the Consumer Credit Counselling Service, Lord Wilf Stevenson has called for the payday loan sector to be regulated. The Labour peer claimed that amendments would be made to the Financial Services Bill, by the Government, in order for the sector to be regulated over the next year, should it fail to self-regulate. Lord Stevenson said: "The amendment calls on the financial authorities to come up with a scheme for regulating high-cost loans, or payday loans, within a year. The truth is that the people who earn least in our society have the most need to have access to short-term borrowing such as payday lenders so they can just get through the year."

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Hard to believe payday loans are not already regulated.

Direct Line Insurance

Are being forced to sell their insurance side.

Mortgages and Savings will remain under RBS.

Mortgage lending from mutuals soars

Mortgage lending by building societies rose significantly during July according to latest figures from the Building Societies Association (BSA). Mutuals lent a total of £3.1 billion to mortgage customers last month, 44% more than in July 2011 and 14% more than in June. According to the BSA, 26% of all UK mortgage approvals were from building societies, 32% higher than the previous year, suggesting more people are turning to mutuals following various scandals in the banking sector. Market share from building societies rose to 24% in July, a rise of 17% compared with the same period last year. Savings balances also boomed to over £1 billion in July, much higher than the same month last year, although the BSA were quick to point out that savings flows tend to vary from month to month. Adrian Coles, director-general of the Building Societies Association, said: "Mutuals are currently enjoying a sustained increase in lending activity, and an increase in deposits from savers. Lending activity by mutuals has been growing strongly on a year on year basis for some time now, and in July gross lending rose again by a healthy 44%. At the same time lending by banks fell by 9% in July. As a result mutuals continue to take market share, up to 24% in July, well above the 17% figure for the same month on 2011."

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Freddie Mac says 30-year fixed mortgage plunges below 3.5%

The typical rate on a 30-year fixed mortgage tumbled below 3.5% for the first time this week, Freddie Mac said -- the latest record low in a trend that has fired up refinancing but done little to ignite housing demand.

Asda makes financial services play

UK supermarket giant Asda has re-branded its personal finance arm as it prepares to become the latest retailer to take on traditional high street banks.

Government publishes vision for mutuals

The Government has published its vision of the building society sector, stating how recommendations of the Independent Commission on Banking (ICB) will apply to the sector. The document confirmed the Government's support for building societies and said it will consider removing any potential lending and funding restrictions. Graham Beale, chief executive of Nationwide Building Society, said: "As the largest building society, Nationwide is unique on the high street, providing a mass-market, mutual challenge to the banks across the full range of retail financial services. The Government's commitment to review and revise building society legislation to support these aims is a positive step forward."

moneyfacts.co.uk

RBS customers are still suffering

Thousands of RBS customers are still being hit by problems with their accounts - nearly a fortnight after the banking group's computers went into meltdown. They include many of the 1.9 million customers at its subsidiary Ulster Bank, who still have no idea when their nightmare will end. A fault in its computer system, which was being supervised in India, plunged RBS into chaos on June 21. It affected 7.5 million of the bank's retail customers. Many did not have wages paid in, and others missed mortgage and loan payments after direct debits were not paid.
[Daily Mail page 45 - 4.7.12.]

Banks to improve saving protection publicity

New rules mean banks, building societies and credit unions will have to prominently display posters and stickers in branches and on websites explaining which deposit guarantee scheme applies to their customers' deposits. The Financial Services Authority (FSA) wants the change to take effect from 31 August this year. After this date, if customers are using the UK branch of a foreign bank from the European Economic Area (EEA), posters will have to set out that those customers are not covered by the UK's Financial Services Compensation Scheme (FSCS), but by the bank's national scheme instead, which will need to be specified. "Customers need to feel confident about their money and to do this they need to know what the compensation limits are and which scheme would provide cover in the event of a bank, building society or credit union failure," said Andrew Bailey, FSA director of UK banks and building societies. "Too many people assume that because their branch is located on a local high street in the UK, they are covered by the FSCS. This is not true for UK branches of EEA banks where the home country's deposit guarantee scheme applies." The regulator has published prescribed wording in order to assist the various banks, building societies and credit unions.

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Banks increase SVRs

Five banks increased their standard variable rates (SVRs) yesterday, with more than one million homeowners to be affected. Bank of Ireland, Clydesdale and Yorkshire Banks, Co-operative Bank, Halifax and Royal Bank of Scotland/NatWest all increased their SVRs. The bank with the most affected customers is Halifax, with around 850,000 customers hit by the 0.49% increase, with the SVR rising to 3.99%. Estimates by Which? suggest that the upturn in SVRs could add £300 million to the UK's mortgage bill over the next 12 months. "Our advice to anyone struggling with their mortgage repayments is speak to your lender straight away," Which? chief executive, Peter Vicary-Smith said.

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GE boss has UK's banks in his sights

[Sunday Telegraph Business page B3 - 25.3.12.]

GE, the US power and industrial conglomerate, is to open its first British bank in the biggest launch into the UK banking sector since the financial crisis. The new internet bank - to be called GE Capital Direct - will aim to attract billions of pounds of savings in its first year of trading. It wants to increase the size of its £10 billion-plus UK corporate loan book. The launch amounts to a declaration of intent on high street incumbents such as Lloyds Banking Group and Santander plus relative newcomers including Virgin Money and Metro Bank, with GE expected to offer keener interest rates to long-term savers due to the strength and size of its balance sheet.

Lenders increase SVRs

Clydesdale and Yorkshire Banks have announced an increase to their standard variable rates (SVR) for residential mortgage customers. The increase is to come into effect from 1 May 2012, and will see the banks' SVRs rise from 4.59% to 4.95%. The banks cited the increased costs associated with wholesale borrowing as the reason for the increase, while pointing out that it was the first change to the SVRs in three years. A customer with a £100,000 mortgage will see their monthly bill increase by around £30 per month. "This change will help enable us to continue to support savers and maintain the competitiveness of our deposit rates," commented Steve Reid, retail director.

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ISAs overtake pensions

For the first time since 2001/2, Britons saved more into stocks and shares ISAs than personal pensions last tax year, AJ Bell has said. Figures from the Office for National Statistics released today showed that £14.28 billion was saved into personal pensions (excluding stakeholder) in the 2010/11 tax year compared to £15.8 billion saved into stocks and shares ISAs in the same tax year. This compares with £12.5 billion being subscribed to stocks and shares ISAs and £14.4 billion contributed to personal pensions in 2009/10. AJ Bell's Billy Mackay said it was a 'ticking timebomb for the UK'. "The Government needs to do everything possible to make pensions attractive and simple," he added.

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'Onshoring' IT services and bringing jobs back home

http://www.techrepublic.com/blog/tech-manager/onshoring-it-services-and-bringing-jobs-back-home/7485?tag=nl.e101

Temenos 33% drop in new license sales for Q4

Reporting its fourth quarter and full year 2011 results, Temenos emphasised that discussions are ongoing with Misys, despite the interest shown by private equity suitor Vista Equity Partners in scuppering the deal.
Commenting on the results, Temenos CEO Guy Dubois says: "The sovereign debt crisis in Europe and its impact on funding markets put the banking sector back into a state of uncertainty. As a consequence, we saw decision cycles lengthen substantially with a corresponding impact on licence sales."
Fourth quarter license sales fell by nearly a third, while full year sales slipped by nine percent, despite the group signing 40 new banks, including two coveted tier one institutions.
The impact of the sovereign debt crisis severely impaired performance in the final quarter, with revenue down 15% and adjusted Ebit falling by 35% to $35m. Over the year, revenue was up by six percent, boosted by a strong rise in maintenance sales and services from the vendor's captive customer base.
The results keenly demonstrate Temenos' eagerness to seal the deal with Misys, effectively removing a potent competitor from the market and opening the opportunity for cross-sales.
Temenos says it is unable to give an outlook for 2012 as discussions with Misys continue. An announcement fleshing out the full terms of the proposed deal is expected within the next few days.

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End of Stamp Duty holiday is close by

Scheme that exempts first time buyers from the tax on properties worth up to £250,000 - comes to an end on 24 March. Quick, buy that house.

Mortgage lending increases

Gross mortgage lending declined to an estimated £10.5 billion in January. Lending fell 14% from £12.2 billion in December but was 10% up on the £9.5 billion in January 2011, according to the Council of Mortgage Lenders (CML). While a seasonal decline is expected, January was the sixth month in a row of higher year-on-year lending, with first time buyers boosting numbers. "The increase in lending compared to January last year helps support our view that housing and mortgage market activity may be boosted by first-time buyers seeking to complete deals before the stamp duty concession ends in March," commented Bob Pannell, chief economist at the CML.

AAA Ratings

Moody's Investors Service has warned it may cut the credit ratings of 17 global banks and 114 European financial institutions in response to Europe's debt crisis. HSBC, Barclays, Royal Bank of Scotland and Lloyds are amongst the banks whose existing credit ratings Moody's said did not reflect the challenges that they were facing in the market. Credit Suisse, Morgan Stanley and UBS have been warned they could see their credit ratings cut by up to three notches, while Barclays, BNP Paribas, Citigroup, Credit Agricole, Deutsche Bank, Goldman Sachs, HSBC Holdings, JPMorgan Chase, Macquarie and Royal Bank of Canada face a possible two notch cut. Bank of America, Nomura, Royal Bank of Scotland and Societe Generale may be downgraded by one notch. "Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions," said Moody's. "These difficulties, together with inherent vulnerabilities such as confidence-sensitivity, interconnectedness, and opacity of risk, have diminished the longer term profitability and growth prospects of these firms." Earlier in the week the agency downgraded six European nations and warned Britain, France and Austria they could lose their AAA rating.

Source: Moneyfacts

Misys merger with Temenos?

UK core banking vendor Misys has confirmed that it has begun talks with Swiss rival Temenos about a possible all share merger.